Monday, February 28, 2011
Azam Ahmed, Dealbook, NYTimes, Galleon Whistle-Blower Agrees to Testify
Mike Koehler, FCPA Professor, "Foreign Official" First
Mike Scarcella, BLT Blog, DOJ Urges Judge to Void Bloch's Guilty Plea
Michael Tarm, AP. law.com, Blagojevich to Face Fewer Charges at April Retrial
DOJ Press Release, Horizon Lines LLC Agrees to Plead Guilty to Price Fixing on Coastal Water Freight Services Between the Continental United States and Puerto Rico -Charlotte, N.C.-Based Company Agrees to Pay $45 Million Criminal Fine
Friday, February 25, 2011
Anthony J. Franze & R. Stanton Jones (Arnold & Porter LLP) have a wonderful article in Bloomberg Law Reports titled, With Friends Like These: The Troubling Implications of the Government's Recent Effort to Block Amicus Curiae Briefs in a Controversial White Collar Criminal Appeal.
Amici briefs serve an important function and courts often rely on amici to present matters that need to be addressed in a case. One would think the government - as "ministers of justice" - would want the court to hear and read everything. So a non-consent on the filing of amici briefs in a case when government conduct is being questioned is troubling. And if the amici briefs are nothing more than someone "seeking to 'inject interest group politics into this case'" - wouldn't the court be capable of recognizing this?
I have previously blogged about the Rubashkin case here.
Check out this story by Lisa Black in the Chicago Tribune titled - Ex Cons Offer Prison Primers for soon-to-be incarcerated execs
(esp)(w/ a hat tip to Professor Bob Batey)
Tuesday, February 22, 2011
Monday, February 21, 2011
DOJ's requested budget focuses a good bit on national security. But there is also money for continued activity on financial fraud. In a DOJ Press Release it states,
"The FY 2012 budget also supports the continued efforts to crack down on financial fraud. From August through December 2010, the Attorney General’s Financial Fraud Enforcement Task Force brought charges against over 500 criminal and civil defendants for fraud schemes that have harmed more than 120,000 victims throughout the country, involving more than $8.0 billion in estimated criminal losses and more than $2.1 billion in estimated civil losses. In addition, the FY 2012 budget requests $3.0 million of program increases for the Criminal Division for transnational enforcement of intellectual property law."
AP, Pa. judge guilty of racketeering in kickback case; Dave Janoski & Michael R. Sisak, The TimesTrib.com, Defense, prosecution declare victory in Ciavarella conviction; Terrie Morgan-Besecker,The Times Leader, Grounds for an Appeal? - Defense attorney believes sufficiency and admissibility of evidence are key issues
E. Scott Reckard, Wash Post, Criminal probe dropped against Countrywide CEO Angelo Mozilo (w/ a hat tip to Ivan Dominguez)
SEC Press Release, Sean McKessy Named Head of Whistleblower Office
Del Quentin Wilber & Mike DeBonis, Wash Post, Ted G. Loza, former D.C. Council aide, pleads guilty in corruption case
Sunday, February 20, 2011
Thursday's Wall Street Journal has a fascinating piece here by Steve Eder, Michael Rothfeld, and Jenny Strasburg on the friendship, between Donald Longueuil and Noah Freeman, that was shattered by the SDNY's insider trading probe. As the white collar world now knows, Freeman secretly recorded Longueuil. Longueuil's damaging admissions were captured, quoted in the criminal complaint against Longueuil and Samir Barai, and splashed across the headlines. Freeman has pled guilty and his plea agreement is publicly available.
I thought it might be interesting to compare Freeman's plea agreement to that of Danielle Chiesi, who recently pled guilty in the Raj Rajaratnam case. Chiesi has not agreed to cooperate against Rajaratnam as part of her deal, but Freeman has agreed to cooperate with the government against Longueuil. The Noah Freeman Plea Agreement is a classic, bare bones, SDNY white collar plea deal. Unlike the vast majority of federal criminal plea agreements in other jurisdictions, the Freeman agreement contains no Sentencing Guidelines calculations or stipulations. Freeman agrees to plead to two felony counts--securities fraud and conspiracy to commit wire and securities fraud. The maximum statutory term for those two counts combined is 25 years. Freeman agrees to pay restitution and to forfeit proceeds traceable to the charged offenses. The government agrees not to prosecute him further, except for tax crimes, and to recommend a Section 5K1.1 downward departure if he continues to truthfully cooperate. And that's about it.
Why is the agreement structured this way? Because SDNY prosecutors do not want want to put anything into the agreement which would indicate to a jury what actual sentence Freeman might get. If hard Guidelines numbers were put into the agreement, even as non-binding stipulations, Longueuil's attorney could compare those numbers, during Freeman's cross-examination, to the stratospherically higher Guidelines sentence Freeman would have received sans cooperation. Now, when Freeman takes the stand against his former friend, he can truthfully tell the jury that he has no idea what sentence he will ultimately receive. Sure, he wants a light sentence or probation, but all he knows is that he is looking at a statutory max of 25 years and some kind of 5K1.1 motion if he tells the truth.
And what is Freeman's attorney told by the prosecutors, or what does the attorney already know without being told if he or she has practiced long enough in the SDNY? "Trust us. We are not going to promise your guy anything other than a 5K1.1, but if you look at what past white collar targets have received when they came in early and cooperated, you will see that we treated them fairly. Many of them received probation or light sentences. By the way--if you come in on the eve of trial, don't expect to be treated as well." The defense attorney relays this information in some form or another to the client and tells the client that there is no guarantee. He also tells the client that the people who came in early and cut plea deals in the World Com case got probation or light sentences. That fellow who came in right before trial got five years. The guy who went to trial and lost got hit with 25. The client ususally takes the deal. (Who wants to roll the dice with those odds?) It all makes for a much cleaner trial and cross-examination in the government's view.
Contrast this with Chiesi whom the government does not need and who litigated her case like crazy almost until the eve of trial. The Danielle Chiesi Plea Agreement is highly structured and much more like those you will see in other parts of the country. Chiesi pled to three conspiracy counts, each carrying a five year max. The government and Chiesi stipulated as to the appropriate version of the Guidelines, the Guidelines section applicable to her conduct, the base offense level, the adjusted offense level based on an agreed-upon amount of gain, and Chiesi's acceptance of responsibility. The parties stipulated that Chiesi's Guidelines offense level is 21, her criminal history category is I, and her Guidelines sentencing range is 37-46 months. Either side is free to argue for a Booker downward variance, but neither side can argue for an upward or downward Guidelines departure or adjustment unless it is specifically called for in the agreement. Because the prosecutors do not particularly need Chiesi, they are not worried about how her 37-46 month range compares to what her range would have been sans cooperation.
In one of those delightful traditions peculiar to the SDNY, neither of these plea agreements has been publicly filed with the appropriate district court, although neither agreement is under seal. This is insane. Jason Pflaum's plea agreement is virtually identical to Freeman's. Pflaum consensually monitored the conversations/messages of Sam Barai and is expected to testify against Barai and others.
Alan Ellis, John R. Steer, and Mark H. Allenbaugh, have a fascinating article titled "At a Loss for Justice - Federal Sentencing for Economic Offenses." They note how "more than 300 federal criminal statutes are covered by" USSG § 2B1.1. The article contains wonderful tables that compare the amount of loss to the sentence given. The data in this article should prove helpful in making an argument in a sentencing hearing. The authors conclude the article by noting the need to revisit this fraud guideline.
The article has wonderful data that supports an argument I have long made - that we need to rethink giving Draconian sentences, in some cases in excess of twenty-five years, to non-violent first offenders who commit white collar crimes. See Ellen S. Podgor, The Challenge of White Collar Sentencing, 93 Jrl of Criminal Law & Criminology 731 (2007).
Friday, February 18, 2011
The Third Circuit Court of Appeals affirmed a district court opinion here that dismissed conspiracy and attempt charges under section 1951 (Hobbs Act) finding "that acting 'under color of official right' is a required element of an extortion Hobbs Act offense, inchoate or substantive, when that offense does not involve threatened force, violence or fear." The court looks at the text of the statute, the legislative history, and provides a wonderful discussion on the history of the phrase "extortion under color of official right." The bottom line is that "[c]onduct by an unsuccessful candidate in an election does not meet that requirement."
Editorial, Wash Post, Jack Johnson's indictment: Another blow to Prince George's
Editorial, Wash Post, Jack Johnson's indictment: Another blow to Prince George's
David Hechler, Corporate Counsel, Ex-Sequenom In-House Counsel Pleads Guilty to Insider Trading Charges
Diana B. Henriques, NYTimes, From Prison, Madoff Says Banks ‘Had to Know’ of Fraud
Jenna Greene, BLT Blog, SEC Charges Amish Man with Securities Fraud
Kaye Scholer LLP,Tyson Foods Resolves FCPA Investigation with U.S. Government; Shannon Green, Corporate Counsel, Court Docs Show Role of Tyson In-House Lawyers in Foreign-Bribery Case
Julie Triedman, AmLawDaily, Accused Ponzi Schemer Stanford Sues Prosecutors, FBI Agents, SEC Lawyers
Juliet S. Sorenson, ABA - Insights from the Trenches, A Voice From the Past Rings True 35 Years Later: Ted Sorensen on the FCPA (w/ a hat tip to T. Markus Funk - Perkins Coie)
"In certain circumstances, a prisoner who challenges her conviction must convince a court that she is actually innocent in order to get relief. Unfortunately, such judicial exonerations often fail to persuade prosecutors, who are generally free to retry prisoners who successfully challenge their convictions. There have been several instances in which prisoners have convinced courts of their innocence and overturned their convictions, only to have prosecutors bring the exact same charges against them a second time. This Article argues that the Double Jeopardy Clause protects these exonerated defendants from the ordeal of a second prosecution. Permitting prosecutors to continue to pursue such individuals contradicts established Supreme Court case law, violates the policies animating the Double Jeopardy Clause, and impairs the operation of the criminal justice system."
Thursday, February 17, 2011
A DOJ Press Release issued today titled, Medicare Fraud Strike Force Charges 111 Individuals for More Than $225 Million in False Billing and Expands Operations to Two Additional Cities tells that "[t]he Medicare Fraud Strike Force today charged 111 defendants in nine cities, including doctors, nurses, health care company owners and executives, and others, for their alleged participation in Medicare fraud schemes [allegedly] involving more than $225 million in false billing,..." It states that "[t]oday’s operation is the largest-ever federal health care fraud takedown."
The press release notes that:
"The defendants charged today are accused of various health care fraud-related crimes, including conspiracy to defraud the Medicare program, criminal false claims, violations of the anti-kickback statutes, money laundering and aggravated identity theft. The charges are based on a variety of alleged fraud schemes involving various medical treatments and services such as home health care, physical and occupational therapy, nerve conduction tests and durable medical equipment.
"According to court documents, the defendants charged today participated in schemes to submit claims to Medicare for treatments that were medically unnecessary and oftentimes, never provided. In many cases, indictments and complaints allege that patient recruiters, Medicare beneficiaries and other co-conspirators were paid cash kickbacks in return for supplying beneficiary information to providers, so that the providers could submit fraudulent billing to Medicare for services that were medically unnecessary or never provided. Collectively, the doctors, nurses, health care company owners, executives and others charged in the indictments and complaints are accused of conspiring to submit a total of more than $225 million in fraudulent billing."
AG Holder, speaking at a press conference stated that "[w]e are also pleased to announce the expansion of the Medicare Fraud Strike Force – which currently operates in Baton Rogue, Brooklyn, Detroit, Houston, Los Angeles, Miami, and Tampa – to two additional cities: Dallas and Chicago."
Tuesday, February 15, 2011
In a case pending and set for trial in March in the Central District of California, with allegations of FCPA and money laundering violations, DOJ prosecutors are seeking to start another grand jury investigation of the defendants. Lawyers for the defendants cried foul and moved to quash five subpoenas calling for testimony today. As a result, the federal judge presiding over the case imposed stringent conditions on any use of the grand jury by DOJ prosecutors.
A grand jury is not to be used for "strengthening [a] case on a pending indictment or as a substitute for discovery." (Beasley, Simels, Arthur Andersen). Prosecutors claimed that their purpose in questioning these witnesses, all current employees of the company under indictment, was for a "new" investigation. Interestingly, the filings show that this "new" grand jury investigation came immediately after DOJ prosecutors were denied access to the employees for pre-trial, witness preparation interviews.
Defense lawyers Jan Handzlik and Janet Levine also argued that the DOJ prosecutors were "manufacturing" a new investigation to create reasons to postpone the trial, set for March 29th. They suspected the government would seek a superseding indictment leading to a trial continuance. Prosecutors disagreed and filed an under seal, in camera declaration to justify the new investigation.
US District Judge Howard Matz denied the defense motion to quash the grand jury subpoenas, but issued an order that handed the DOJ prosecutors what some of us consider to be a stinging defeat. He placed conditions on what the government could do if it chose to proceed with its "new" investigation, stating in part:
(1) At the upcoming trial, the Government may not proffer or refer to any newly obtained evidence derived from the testimony of any witness before any grand jury session conducted after the return of the First Superseding Indictment on October 21, 2010. . . .
(2) The Government may not, and shall not, question any witness about any business and financial relationship that the [defendant ] Company had with [other individuals and entities named in the pending indictment]
(3) The Government may not, and shall not, question any witness about any of the other events that directly form the basis for the charges contained in the first superseding indictment.
(4) The Government shall file under seal a transcript or transcripts of the grand jury testimony it obtains from the aforementioned witnesses, and it shall do so by not later than one week before the start of trial, and
(5) The Government may not point to or rely on whatever evidence it obtains at the upcoming grand jury sessions to seek or obtain a continuance of the trial date.
See Court's Order - Download Matz min order re GJ
See also Richard Cassin, FCPA Blog, Sparks Fly Before LA Trial
Mike,Scarcella, BLT Blog, Abramoff Associate Sentenced to 20 Months in Prison
Richard L. Cassin, FCPA Blog, Playing Chicken With The Rule Of Law
Brian Bowling, Pittsburgh Tribune Review, Judge Denies Former Footnball Star's Motion to Vacate Fraud Sentence
Saturday, February 12, 2011
Antitrust and Title 18: How the Antitrust Division Goes Beyond the ShermanAct to Enforce Its Mission - Friday, February 11, 2011, Atlanta, Georgia - 4:00 p.m. – 5:30 p.m. - M202, Marquis Level here
The Third Annual National Institute on Internal Corporate Investigations and Forum for In-House Counsel, May 4-6, NY here
25th Annual National Institute on White Collar Crime, March 2-4-, 2011, San Diego - here
20th Annual National Seminar on the Federal Sentencing Guidelines, May 4 - 6, 2011, sponsored by The Tampa Bay Chapter of the Federal Bar Association, The National Association of Criminal Defense Lawyers, andThe Criminal Justice Section of the American Bar Association -Buena Vista Palace Hotel & Spa in Orlando, FL here
Thursday, February 10, 2011
I am not qualified to judge the greatest criminal defense lawyer of all time. I have not had the privilege of seeing all the great ones at work. But I have seen quite a few, and can tell you that the greatest criminal defense lawyer I ever knew and saw in action was Jack Paul Leon of San Antonio. He died yesterday after a valiant struggle with pancreatic cancer. I will post an extended tribute in a few days, but for now--rest in peace Jack. In my book, you were the king.
Wednesday, February 9, 2011
DOJ Press Release, Maryland Man Convicted of Defrauding Cisco Systems Inc.
Jenna Greene, BLT Blog, Four Hedge Fund Managers Charged in 'Matchmaking' Scheme;
Christopher Drew, NYTimes, Ex-Dow Scientist Is Convicted of Selling Secrets in China (hat tip to Ivan Dominguez)
Jack Townsend, Federal Tax Crimes, Sentencing Disparities (disucssing the Thorson case)
David Gannaway, MarksPaneth & Shron Library, Mitigating Corporate Fraud Roundtable, 2010-11-30
Jeff Gottlieb, LA Times, Bell corruption hearings set to begin Monday
Mike Scarcella, BLT Blog, D.C. Prosecutors Push For Plea Deal in Scott Bloch Case
Jenna Greene, BLT Blog, SEC Appoints a New General Counsel
US Marshals Service, US Marshals to Auction Art that Belonged to Convicted Fraudster Marc Drier
Tuesday, February 8, 2011
The White Collar Crime Blog mourns the passing of Mark Hulkower, who practiced white collar criminal law at Steptoe & Johnson. See Jeff Jeffrey, BLT Blog, Mark Hulkower, Defense Attorney for High-Profile Clients, Dies at 53; Steptoe & Johnson, In Loving Memory, Mark J. Hulkower (1957 - 2011).
Monday, February 7, 2011
Finding no bribery or kickbacks, a U.S. District Court in the Eastern District of California set aside and vacated in its entirety an honest services mail fraud conviction. See here - Download Judicial Order The Motion to Vacate this Conviction was presented via a Motion of Coram Nobis - Download Corum Nobis Petition Some will obviously claim that this is why section 1346, the honest services fraud provision, should be rewritten. Others of us will say - this is exactly why such a prosecutorial extension should not be allowed. When prosecutors have a deprivation of "money or property," even when the property is intangible property, there is ample basis for prosecuting mail and wire fraud. But to allow prosecutions premised on intangible rights, with little understanding of what constitutes intangible rights, provides prosecutors with discretion that allows them to stretch prosecutions beyond what folks would recognize to be criminal conduct. Attorney Doug A. Goss represented the accused in this case.
See also Scott Smith, Recordnet, Judge vacates conviction of ex-prosecutor
Sunday, February 6, 2011
Lance Cole & Stanley M. Brand, Congressional Investigations and Oversight: Case Studies and Analysis, Carolina Academic Press (2011) - Carolina writes:
"This book examines the legal and policy issues surrounding congressional investigations through a series of case studies, with an emphasis on the period from the second half of the twentieth century to date. It is organized by case study topic, with each chapter using one or two case studies to introduce and analyze a discrete area of legal authorities and policy issues. The central thesis and organizing principle of this book is to highlight the importance of effective congressional oversight and investigative activities in our American democratic system of government, as well as the constitutional and parliamentary bases for this legislative power. In addition to collecting legal authorities, the book includes relevant historical information and structural analysis of government functions, with an emphasis on separation of powers issues."